The Internet Gold and The Evolution of Money: Part 3

 

            Hello everyone. This is the final phase of the article on bitcoin. So far we have learnt alot about bitcoin and we can all come to agree that this digital invention has bred newer grounds in technology. It has also given rise to the other altcoins we have like Etherum(ETH), Cardano(ADA), Ripple(XRP) and much more. We also now have more of digital ownership; all of which will be discussed in future articles. but today we want to focus on a major concept in bitcoin and also focus on the future of this digital innovation. So let's head right into it.

Bitcoin as Digital Energy

      Bitcoin is digital energy. It sounds crazy right but it's true and we will prove it to you. Now bitcoin is widely known for solving the double-spend problem and the problem of centralized transactions. If it is examined more critically, solving the double spend problem is like solving the problem of conservation of energy.  So let us make this a personalized scenario. 

     If I send you an mp4 file, I just sent you digital information and you can decode that with your computer. If I sent you a hash or key to a control server, I haven't sent you digital information but only the right to access that information. So whenever you have something that is non-conservative in the universe, you get inflation. So the digital information you are sent is not energy because it is non conservative. The last 30 years has been about digital transformation and this is non conservative in the universe and so there is an explosion of all good things naturally. What is the difference between that and a file containing a private key that grants you access to a billion dollars in bitcoin. If I send you the private  keys to my bitcoin fortune, you can indeed buy an entire city or building and I can't because I transferred digital energy to you so I cannot purchase the property anymore.

     For the first time in the whole of cyberspace, you have to start thinking about energy, frequency and vibration. Now, the file I gave you which grants you access to my bitcoin fortune. How do you utilize it? You convert it from digital to political energy by passing it through an exchange thus converting the bitcoins to yen and then you can buy the building with it. So you went from digital energy to political energy then to matter. The Japanese yen is a low frequency currency because it has lost 14% of its value in the past weeks. Bitcoin is a strong currency because it has a high frequency. The U.S dollar has med frequency so it is also a strong currency. When we call a currency weak or strong, it is a representation of the coefficient of energy lost (the coefficient of adiabatic lapse in the fluid as the energy moves through it. So the currencies are just fluids through which monetary energy can flow through. Money is economic energy and capital is the concept of pure economic energy. If you are given a billion dollars in capital to keep for over a hundred years, how do you maintain it? If you put in a weak currency, the value erodes away. If you put in a strong currency, the value increases overtime. Bitcoin is digital gold, digital property, digital money, digital capital, digital energy. Think in terms of frequency, low frequency is property and high frequency is energy. Currency is a medium to move monetary energy(political energy or fiat money).  

      The difference between currency and energy is that currency is medium frequency and discreet money while digital energy could be high frequency and continuous money. Energy is basically anything because the universe is composed of it. Once you get your head around the idea that bitcoin is energy  and that it could vibrate and oscillate at all frequencies and it could be transferred well you know that vibration is the conversion of kinetic to potential energy. So thus we borne the idea that we can create in cyberspace. If bitcoin is digital energy, then one can create radiation in cyberspace. To illustrate that, music flowing through your ears is acoustic energy. In a similar way, you came to my website and you have a lightning wallet and I have a satoshi source. I could decide to pay you a million satoshi for every second you spend on my website, that is like powerful radiation of digital energy because it is amazing just to think of earning a million satoshis every second. And it is kind of practical to radiate satoshis at people. If you understand how bitcoin is digital energy, you can literally create high frequency applications on lightning. Cyberspace right now is actually a simulation because there is always interference of a trusted third party. If a third party such as the banks and governments are removed, then you are able to exchange digital energy freely.  So bitcoin is a block of energy that moves at low frequency on the base layer and moves at a higher frequency on a layer 2 or a layer 3. The current condition right now on cyberspace is that there is no friction or consequence to any actions so thus there are security breaches here and there in the space. So if you are a technologist today and you are thinking of building, you want to think of applications with digital energy for security and aesthetic purposes. So blockchain technology which is the framework on which bitcoin is built helps to solve the problems of security threats. For example, of you build a wall of satoshis in cyberspace like an application and whenever someone comes to your interface, the individual has to post a million satoshis. If someone or a set of people try to attack your wall or application maybe through cyber threats and phishing attacks, you charge them a million satoshis and it becomes increasingly difficult for them to carry out their dark operations.

       So the whole idea with digital energy is one can create an application in cyberspace without requiring a third party right. The doxxing is the problem in cyberspace and so digital energy solves that problem. So without a doubt, bitcoin is indeed digital energy. And how did we draw such conclusions again? Energy is conservative as a whole which means it can be transferred from one form to another. Bitcoin is conservative because it can be transferred from digital energy to political energy. In addition to that, it is the first and only currency to ever solve the double spend problem(which is the problem of conservation of energy) so it is digital energy.

 

Bitcoin vs the Traditional Banking System

     "It is well enough that people of the nation do not understand our banking and monetary system because if they did, I believe there would be a revolution before tomorrow morning"

- Henry Ford -

 

     Our financial system is a matrix. We will find out very soon why that is so. First of all for a powerful reminder, why was bitcoin created? Satoshi Nakamoto stated in an essay accompanying bitcoin's code that: " The root problem with conventional currencies is all the trust required to make it work. The central banks must be trusted not to debase the currency but the history of fiat currency is full of breaches of that trust. 

     The fiat system can be compared to a walled garden surrounded by armed guards. Bitcoin penetrates and dissolves this walls and thus helps humanity flourish in the process. Let's illustrate this. Today in the society, we have the massive tech giants like Microsoft, Meta, Apple, Google. These companies present a wide range of products and services for humans to make use of. So they create sort of a digital border line to sap our time, resources and attention. And as humans,  we are in most cases lazy animals and a dominant majority of us tend to thread the path of least resistance. These companies employ different initiatives and incentives to convince us to stay inside their digital gardens or walls while monetizing our data by selling it to the government. 

      The conventional banking system works in a similar way. The central banks  issue money and the government insists that this money be adopted. The fiat standard is a walled garden or thus a fraud and a manipulative scheme. But only outside of this garden, we have an open, limitless, abundant environment of bitcoin. The fiat masters are counting on the height of the walls and men with guns on the other side to prevent you from breaking through the walls to explore the vast and abundant bitcoin paradise. What they never envisaged though is the invincible influence bitcoin offers which enables humans like flowers to sprout right out of these garden walls. These invincible force can only be perceived with our senses but not seen. In it lies the key to a brighter future for humanity. This borderless, financial invention in few years from now will revolutionize the entire globe. 

 

The Million Dollar bitcoin by 2030

     We want to seriously dive deeper into this crazy idea that bitcoin could hit a million dollars a coin before 2030. Popular crypto enthusiasts such as Cathie Wood, Peter Thiel, Elon Musk, Jack Dorsey, Mike Novogratz and the Winlevoss twins all believe in this crazy theory. Now this crazy idea might sound impossible but let us consider some of the facts and statistics that could make this idea realistic.

     Now, the idea of a million dollar bitcoin is based on another idea; scarcity. There are only ever supposed to be 21 million bitcoins in existence but it will take us another 118 years before all 21 million bitcoins finally exist. But as of today, over 90% of bitcoin's entire supply already exists and it will take us more than a century to access just the other 10%. If all the world's millionaires decided to buy bitcoin, they won't be able to because there is not enough to go around. As of 2020, there are 56.1 millionaires around the world which means that each millionaire will only be able to buy over a third of a bitcoin which is technically wrong because today there is more millionaires and roughly 20%(4 million) of all bitcoins in circulation have been lost forever and will never be recovered again. This means that the real supply of bitcoin is close to 17 million and this makes it even more scarce. 

     So what are the facts that could make this million dollar bitcoin possible? Firstly, we will need 25x our investment in bitcoin and the market cap at that point will be 20 trillion dollars. So how much money does it take to move the price of bitcoin. The million dollar bitcoin is flawed if we are looking at it through the lens of market caps. But all the market cap does is multiply the current price of an asset by the total supply. That is why bitcoin's value is not its price or market cap. A perfect instance is the Apple stock market. So Apple's market cap is worth $2.78 trillion. The math here involves multiplying the number of Apple stocks in existence by the current price of one stock to get the implied value of $2.78 trillion. It does not mean that Apple is worth $2.78 trillion. Right now, you can technically start a billion dollar company with just a dollar. All that is required is for you is to create a company with a billion shares outstanding and sell a single share to someone else for a dollar and then you have a billion dollar company. Now bitcoin is not a stock or a commodity so you don't need as much money to move its price. Evidence of this is on December 20, 2020 when Tesla bought $1.5 billion worth of bitcoin. It was on the same day earlier on that Elon Musk asked Micheal Saylor whether such transactions were even possible.

     It was then people started to buy the rumour that maybe Elon was getting into bitcoin. That was the potential indicator that the price of bitcoin could skyrocket. Now many didn't officially know about Tesla's purchase until the SEC filing in February 2021. Now bitcoin opened the day of the tweet at $23000 but by the time the purchase was officially announced, the price of bitcoin more than doubled. So we would need about 10-20%($2-4 trillion) of the estimated $20 trillion market to make the million dollar bitcoin possible and this is a lot more realistic than what we had before. But with this estimate, it might still almost be impossible to make the million dollar milestone or could it? There are some catalysts that could make it possible:

-  The first is the remittance market. This is where we send money from one market to another like in the case of Ukraine. If Bitcoin could capture 50% of the remittance market, that would add roughly $300 billion to its market cap or roughly $14000 to its price.

- The second catalyst is the emerging market currencies. This is called The M2 supply of money. This comprises of pure liquidity. The emerging part refers to countries that are transitioning from development to modernization.Examples are the Chinese reminbae, russian ruble, brazillian real, turkish lira. This is where bitcoin could serve as a store of value. If bitcoin could capture 10% of the global market  here, this would add $2.8 trillion to its market cap or roughly $133,000 a coin to the value of bitcoin excluding the top 4 emerging countries

- The third catalyst is the economic settlement network. This is where banks send money to each other and this happens digitally but at some point, they will want to settle in a final currency usually the dollar but it could be a digital currency like bitcoin and if bitcoin could capture just 25% of the market share here that will add about $3.8 trillion to the market cap or $181,000 per coin. 

- The fourth catalyst is the Nation State Treasury. This is like the cash reserves of a country or its little emergency funds and if bitcoin copuld capture just 1% of the global market here, that will add another $3.8 trillion or a $181, 000 to its value.

- The fifth catalyst is High Net Worth Individuals(HNWIs). If those people held 5% of their assets in bitcoin, this will add roughly $4 trillion to the market cap or roughly $190,000 per coin.

- A sixth catalyst is institutional investors like Black Rock held only 2.5% of their assets in bitcoin, that would add $4.1 trillion to the market cap and roughly $196,000 per coin.

- The seventh catalyst is corporate treasury bonds. This is where companies raise capital by creating some debt and if only 5% of their assets were held in bitcoin, that would add roughly 4.2 trillion to the market cap or $20,000 to the price.

- The eight catalyst would be gold. If bitcoin could capture up to half of gold's market cap, that would add $5.5 trillion to its market cap or $260,000 to its price.

     We could all probably agree are all relatively conservative but all together, the market cap will be $28.5 trillion at $1.36 million per coin. But critics claim that this price is impossible or is it? 

if we take a look at the market capitalization of bitcoin outlined in this graph, we can see that it is way less than the market cap of gold around $8 trillion which is still less than the market cap of the global stock market around $73 trillion which is still less than the market cap of global money supply(M2) about $90 trillion which is way less than the market cap of real estate at $228 trillion which is a little less than the market capitalization of national debt at $246 trillion. When we consider how much room there is for growth, we can draw reasonable conclusions that bitcoin could actually get to the million mark.

     So the big question still on the minds of many is will bitcoin become the reserve currency of the world? The answer is Yes it would. Why is this? This is because Bitcoin is an asset that is designed to be money; decentralized unregulated money. This means you are in full control of your assets and you can set your own limits. You can travel around the world with a billion dollars in bitcoin and no one will question you. Bitcoin is also a fungible asset which means that all Bitcoins are the same and have the same market value. Though, bitcoin is not traded as an inflationary hedge, it is treated as a minor asset. And finally bitcoin births freedom from the Fed, the U.S treasury and the government as a whole. So yes bitcoin is definitely going to take over as the US dollar as a future reserve asset.  Thank you  guys, i hope you all enjoyed this article. Share with your friends and loved ones and I will see you in the next article. Peace